Masala bonds are rupee-denominated bonds issued by Indian corporations abroad, primarily in London. These bonds allow Indian firms to raise funds overseas without currency risk for the issuer. Foreign investors can earn relatively high interest rates on masala bonds compared to their home countries. Real estate and infrastructure entities are also eligible to issue masala bonds, subject to RBI guidelines including a minimum 5-year maturity. The success of masala bonds will depend on hedging costs for foreign investors and stability in the rupee-dollar exchange rate.